“Wet conditions in parts of Western Europe have had an impact on wheat quality, so that more of the EU crop will be destined for the feed market,” Jack Watts, lead analyst, cereals and oilseeds, with Agriculture and Horticulture Development Board (AHDB) Market Intelligence, told FeedNavigator.
Watts speculates that this could prompt some European feed producers to replace imported corn with homegrown wheat in their formulations, particularly given current uncertainty around the size of the Ukrainian corn crop.
Overall, the USDA has reined in its estimates for EU wheat production, although the global picture is one of bumper wheat production.
“A big global wheat crop that just keeps getting bigger is the highlight of the report,” said Watts.
World wheat production for 2014/15 was raised 10.9mt to a record 716.1mt, with Russia, China and the Ukraine slated for the largest increases, of 6mt, 2mt and 1mt respectively.
“This is being driven by high winter yields, especially for Russia, and will put pressure on the price of Russian and Ukrainian crops, forcing them to be aggressive exporters,” said Watts.
He added that the current instability, which was reportedly leading to financing issues, was also compounding pressure on Russia and the Ukraine to become keen sellers.
Raise for maize
Projected US feed grain supplies are also raised, with higher production forecasts for corn, sorghum, barley and oats.
The US agency has raised its projections for corn production, although not by as much as anticipated.
“Our expectation was that the USDA would increase its estimates for US maize yield, which it did, but not as much as people were expecting,” said Watts.
US corn production for 2014/15 has been revised by 172 million bushels, putting it at a record 14,032 million bushels, and Watts believes this figure will be upgraded in coming months.
“It is likely the USDA will gradually increase its US maize forecast over time; the outlook is bearish for feed prices,” he said.
The projected season-average farm price for corn has been lowered by 10 cents at both ends of the range to $3.55 to $4.25 per bushel.
EU corn production projections have also been revised upwards by 1.4mt after “abundant rainfall and favourable temperatures” during July.
On the back of these larger than expected corn crops in both the US and EU, the USDA has increased its projections for global coarse grain supplies by 4.9mt.
This updated figure also reflects higher production forecasts for barley production in the former Soviet Union countries, Russia, Belarus and Ukraine.
However, the delayed monsoon has dampened prospects for corn, sorghum and millet in India, where total coarse grain production predictions have been downgraded by 2.7mt.
Slight adjustments for soybean
There were also minor revisions to the forecast for soybean products. Production has been revised by 16 million up to 3,816 million bushels, due to a higher yield, and supplies for 2014/15 are projected slightly above last month based on this forecast.
The US season-average soybean price for 2014/15 is forecast at $9.35 to $11.35 per bushel, down 15 cents on both ends. Soybean meal and oil prices are forecast at $340 to $380, down $10 at the midpoint. Soybean oil prices are forecast at 35 to 39 cents per pound, down 1 cent at the midpoint.
However, higher US production is offset by a reduction for India, where the delayed monsoon has resulted in a lower planted area.